E-mini S&P 500 Futures (June): Settled at 2994.50, up 41.50
E-mini Nasdaq-100 Futures (June): Settled at 9406.50, up 0.25
An exuberant start to the week closed on a soft note yesterday after headlines reminded market participants the White House is mulling over sanctions on China for how they handled the Covid-19 outbreak. The S&P 500 failed to settle above its 200-day moving average, which aligned with the psychological 3000 mark and the Nasdaq-100 finished 2% from its session high. Yesterday was characterized by strength in the banks; JPMorgan +7.1%, Bank of America +7.15%, Wells Fargo +8.65%, Citigroup +9.23%. It was not the only sector up strongly though, industrials, energies and others joined the party. However, it was big tech that weighed on the Nasdaq amid this rotation; Microsoft -1.06%, Facebook -1.15%, Apple -0.68% and Amazon -0.62%.
Price action overnight held yesterday’s late session pullback, and this set the stage for early morning strength. Although Asia was mixed, it was Europe that again fueled U.S. benchmarks. With many of the same sectors performing again, such as banks and industrials, the S&P 500 and Russell 2000 are outpacing gains in the Nasdaq-100 ahead of the bell.
Adding a tailwind to risk assets was developments with the European Commission’s €750 billion recovery fund and the plan to issue €500 billion as grants instead of loans. With support from Germany, the market is buying into the belief of a centralized European budget. The strength in risk assets, as well as the Euro, comes as the program would reduce risks of default from weaker members. The yield of the Italian 10-year has lost nearly 50 basis points since the idea gained traction from Germany and France a little over a week ago. Still, there are 4 clear opponents: Austria, Netherlands, Finland and Sweden.
On the economic calendar, we look to Richmond Manufacturing at 9:00 am CT, Dallas Services at 9:30 am CT and comments from St. Louis Fed President Bullard at 11:30 am CT.
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